Economy improves as indicators stay positive

Economic performance indicates agriculture has been a major contributor to growth, says report

By Ashraf Malkham
May 29, 2024
A representational image of a man working in a textile factory. — AFP/File

ISLAMABAD: Pakistan’s key economic indicators have been showcasing stability in the real, fiscal, and external sectors as the country is heading towards the end of FY2024, the Ministry of Finance said in its latest report on Wednesday.

The report titled 'Monthly Economic Update and Outlook report for May 2024', the finance ministry’s Economic Adviser’s Wing noted that signs of economic stability were becoming more evident amid stability in the key sectors.


According to the report, GDP growth is elevating while inflation rates are on a decline with a positive primary balance, reflecting the effectiveness of recent fiscal consolidation efforts.

The economic performance also indicates that agriculture has been a major contributor to this fiscal year’s economic upswing, registering a growth of 6.25%. The agriculture sector’s recovery is mainly attributed to government initiatives through improved input supply and increased credit disbursement to farmers.

Large Scale Manufacturing (LSM) growth in 2024 Quarter 3, became positive and is expected to remain moderately positive on average throughout the second half of the current fiscal year.

It witnessed a minor decline of 0.1% during July-March FY 2024 against the contraction of 7.0% same period last year. During this period, 11 to 22 sectors witnessed positive growth.

The Consumer Price Index (CPI) inflation stood at 17.3% on a year-on-year basis in April 2024 as compared to 36.4% in April 2023. The major drivers include housing, water, electricity, gas & fuel, perishable food items, furnishing & household equipment maintenance, clothing, footwear and transport.

On the fiscal front, during July to March FY24, the revenue growth outpaced the growth in expenditures. Within revenues, both tax and non-tax collection grew significantly by 29.3% and 90.7%, respectively.

Moreover, measures to control non-mark-up spending helped in improving the primary surplus to Rs1615.4 billion (1.5% of GDP) from Rs503.8 billion (0.6% of GDP) last year. While, the overall fiscal deficit remained at 3.7% of GDP, the same as recorded last year.

On the external front, the current account for FY2024 (July-April) narrowed down significantly, recording a deficit of $0.2 billion compared to last year’s $3.9 billion, primarily due to an improved trade balance.

In April 2024, the current account surplus was recorded at $491 million, an increase from $434 million in March 2024. Year-on-year, exports in April 2024 increased by 23.4% to $2.6 billion, fueled by eased import restrictions that enhanced the supply chain for export industries.

In the same period, imports also rose by 22.8% to $4.4 billion. The trade deficit for April 2024 was recorded at $1.8 billion.

Furthermore, the FDI witnessed an increase of 39.1% and reached $358.8 million in April 2024, as against an inflow of $258.0 million last month.

The remittances in April 2024 were encouraging, as they increased on a year-on-year basis by 27.9% to $2.8 billion.

On the back of a persistent policy rate at 22%, during 1st July – 03rd May, FY2024 money supply (M2) shows a growth of 7.1% (Rs 2,229.8 billion) as compared to 7.0% growth (Rs1,943.4 billion) in last year.

Although the signs of a moderate economic recovery are evident. But to sustain this positive momentum, the policy efforts and reforms to raise productivity, and competitiveness are imperative.

In Jul-Apr FY2024, workers’ remittances recorded at $23.8 billion ($23.0 billion last year), increased by 3.5%.

YoY remittances increased by 27.9% in April 2024 ($2.8 billion) as compared to April 2023 ($2.2 billion). However, MoM remittances declined by 4.8% as compared to March 2024 ($3.0 billion) mainly owing to post Eid factors.

Pakistan’s total liquid foreign exchange reserves increased to $14.3 billion on May 24, 2024, with SBP’s reserves stood at $9.1 billion and commercial banks’ reserves remained at $5.2 billion.

“Going forward, the economy will gain momentum in the coming months of this fiscal year,” the report added.